On Thursday, Jul. 11, Jul-19 wheat futures rose 4.8 percent to a six-week high of $5.36 following the June WASDE release. This price is higher than both the Sep-19 and Dec-19 futures contracts, at $5.21 and $5.32, respectively. Jul-19 contract prices rose in reaction to greater overall use of U.S. wheat. Greater overall use of U.S. wheat and lower production overseas were two key factors contributing to price increases.

Total use of old-crop U.S. wheat is estimated to be 2,046 billion bushels (bu), or 24 million bu more than the June estimate. High corn prices may have made wheat as a feed ingredient more attractive than usual. The feed/residual sector is driving greater old-crop use, as it is projected to use 91 million bu, up 41 million bu from the June WASDE projection.

Accordingly, USDA lowered its 2019/20 beginning stocks projection to 1,072 billion bu, down 30 million bu from the June estimate. New-crop total use rose to 2,133 billion bu, for a highly bullish stocks-to-use ratio of 50.3 percent.

Potentially higher feed/residual use could be partially offset by the new-crop production estimate increasing to 1,921 billion bu. This increase is due to a yield estimate of 50.0 bu per acre. Ending stocks in 2019/20 are forecast to be 1 billion bu, down 72 million bu from the June WASDE.

Internationally, USDA lowered its world ending stocks estimate from 294.3 to 286.5 MMT on lower Russian, Eastern European, and Australian production.

Total U.S. wheat production and domestic use, by crop year

Source: USDA
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